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Sony Admits Losing Out on Gadgets

Company Was Hung Up on Content Rights, Executive Says

By Yuri Kageyama
Associated Press
Friday, January 21, 2005; Page E05

TOKYO, Jan. 20 -- Sony missed out on potential sales from MP3 players and other gadgets because it was overly proprietary about music and entertainment content, the head of Sony Corp.'s video-game unit acknowledged Thursday.

Ken Kutaragi, president of Sony Computer Entertainment Inc., said he and other Sony employees have been frustrated for years with management's reluctance to introduce products like Apple Computer Inc.'s iPod, mainly because the Tokyo company had music and movie units that were worried about content rights.

Ken Kutaragi said Sony's fears about music and entertainment content kept it from selling products like the iPod. (Shizuo Kambayashi -- AP)

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Now, Sony's divisions are finally beginning to work together and share a common agenda, Kutaragi said at the Foreign Correspondents Club in Tokyo.

"It's just starting," he told reporters. "We are growing up."

Kutaragi, who has long been viewed as a candidate to lead Sony, was unusually direct in acknowledging that the company had made an error and in blaming proprietary concerns from its entertainment division.

Sony's music players initially did not support MP3 files and only played Sony's own format called Atrac.

Kutaragi said Sony's original spirit of innovative technology had grown "diluted."

"We have to concentrate on our original nature -- challenging and creating," he said.

Once the powerhouse of global electronics, exemplified in its Walkman, Sony has lost some of its glamour lately, losing out in profitability and market share to cheaper Asian rivals.

Kutaragi -- known as the "Father of the PlayStation" for making the game machine a pillar of Sony's business -- said the new, handheld PlayStation Portable will grow into a global platform for enjoying music and movies as well as games.

Sony is boosting production of the PlayStation Portable to 1 million a month this spring to keep up with demand. Sony has sold 800,000 units since the product went on sale Dec. 12 in Japan, Kutaragi said. It is set to go on sale in the United States and Europe this spring.

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